Question 1

As a measure for total factor productivity, we can use the quantity of ________ in an economy.

Accepted Answer

A)  computers 
B)  factories 
C)  machines 
D)  kilowatt hours used 
E)  None of these answers is correct. 
A)  computers 
B)  factories 
C)  machines 
D)  kilowatt hours used 
E)  None of these answers is correct.

Question 2

In the Cobb-Douglas production function   , if a = 1/4, then:

Accepted Answer

A)  capital's share of GDP is one-fourth. 
B)  labor's share of GDP is half. 
C)  capital's share of GDP is three-fourths. 
D)  labor's share of income is one-fourth. 
E)  capital's share of GDP is four. 
A)  capital's share of GDP is one-fourth. 
B)  labor's share of GDP is half. 
C)  capital's share of GDP is three-fourths. 
D)  labor's share of income is one-fourth. 
E)  capital's share of GDP is four.

Question 3

Institutions are one example of factors that influence total factor productivity.

Accepted Answer

A) True 
 B)False

Question 4

If the marginal product of capital equals the rental rate of capital, firms should not buy any more capital.

Accepted Answer

A) True 
 B)False

Question 5

Refer to the following figure when answering the following questions.
Figure 4.1: Production Function  
-Consider Figure 4.1. The shape of this production function suggests:

Accepted Answer

A)  None of these answers is correct. 
B)  a diminishing marginal product of labor. 
C)  a constant marginal product of capital. 
D)  an increasing marginal product of capital. 
E)  an increasing marginal product of labor. 
A)  None of these answers is correct. 
B)  a diminishing marginal product of labor. 
C)  a constant marginal product of capital. 
D)  an increasing marginal product of capital. 
E)  an increasing marginal product of labor.

Question 6

Figure 4.3: The Production Function  
-The solution to the firm's profit maximization is:

Accepted Answer

A)  MPL = w. 
B)  MPL = w and MPK = r. 
C)  MPL  $\lt$ w and MPK =r. 
D)  MPL = w and MPK = 0. 
E)  MPL = w and MPK = r 
A)  MPL = w. 
B)  MPL = w and MPK = r. 
C)  MPL  $\lt$ w and MPK =r. 
D)  MPL = w and MPK = 0. 
E)  MPL = w and MPK = r

Question 7

The marginal product of labor is measured in:

Accepted Answer

A)  dollars. 
B)  units of output. 
C)  units of output per dollar. 
D)  units of capital per dollar. 
E)  units of labor per dollar. 
A)  dollars. 
B)  units of output. 
C)  units of output per dollar. 
D)  units of capital per dollar. 
E)  units of labor per dollar.

Question 8

Consider two economies. If each country has the same production function and the same amount of capital and labor, the country that ________ produces more.

Accepted Answer

A)  is less productive 
B)  is more productive 
C)  has more natural resources 
D)  has lower costs of production 
E)  has more workers 
A)  is less productive 
B)  is more productive 
C)  has more natural resources 
D)  has lower costs of production 
E)  has more workers

Question 9

In the year 2014 total factor productivity was about ________ times ________ important than capital per person when determining differences in per capita GDP using the production model.

Accepted Answer

A)  3; more 
B)  6; less 
C)  one-third; less 
D)  108; more 
E)  10; more 
A)  3; more 
B)  6; less 
C)  one-third; less 
D)  108; more 
E)  10; more

Question 10

In the Cobb-Douglas production function   
, what do a  $\lt$1 and b =1 - a reflect? Show how you derive your answer.

Accepted Answer

a is the share of total national income

Question 11

As a rough approximation, differences in capital per person explain about ________ of the difference in incomes between the richest and poorest countries, while differences in ________ explain ________.

Accepted Answer

A)  one-third; wages; two-thirds 
B)  one-third; total factor productivity; two-thirds 
C)  one-third; total factor productivity; one-third 
D)  one-third; returns to capital; two-thirds 
E)  two-thirds; total factor productivity; one-third 
A)  one-third; wages; two-thirds 
B)  one-third; total factor productivity; two-thirds 
C)  one-third; total factor productivity; one-third 
D)  one-third; returns to capital; two-thirds 
E)  two-thirds; total factor productivity; one-third

Question 12

In the United States, the average number of years of education adults over the age of 25 have obtained is 18 years.

Accepted Answer

A) True 
 B)False

Question 13

Accounting profit is ________ and is equal to ________.

Accepted Answer

A)  income paid to capital; r*K* 
B)  zero; the real interest rate 
C)  equal to two-thirds of national income; r* 
D)  the same as economic profit; zero 
E)  equal to one-third of the labor income; r*L* 
A)  income paid to capital; r*K* 
B)  zero; the real interest rate 
C)  equal to two-thirds of national income; r* 
D)  the same as economic profit; zero 
E)  equal to one-third of the labor income; r*L*

Question 14

If you have data on per capita GDP and capital per worker, to find total factor productivity you can use the equation   
, if capital's share of GDP is one-third.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is an example of technology?

Accepted Answer

A)  just-in-time inventory 
B)  a fork 
C)  improved irrigation 
D)  the Internet 
E)  All of these answers are correct. 
A)  just-in-time inventory 
B)  a fork 
C)  improved irrigation 
D)  the Internet 
E)  All of these answers are correct.

Question 16

The equation   has what two important implications?

Accepted Answer

A)  Output per person tends to be higher when (1) the productivity parameter is higher and (2) the amount of capital per person is higher. 
B)  Output per person tends to be lower when (1) the productivity parameter is higher and (2) the amount of capital per person is higher. 
C)  Output per person tends to be higher when (1) the productivity parameter is lower and (2) the amount of capital per person is higher. 
D)  Output per person tends to be higher when (1) the productivity parameter is higher and (2) the amount of capital per person is lower. 
E)  The population tends to be higher when (1) the productivity parameter is higher and (2) the amount of capital per person is higher. 
A)  Output per person tends to be higher when (1) the productivity parameter is higher and (2) the amount of capital per person is higher. 
B)  Output per person tends to be lower when (1) the productivity parameter is higher and (2) the amount of capital per person is higher. 
C)  Output per person tends to be higher when (1) the productivity parameter is lower and (2) the amount of capital per person is higher. 
D)  Output per person tends to be higher when (1) the productivity parameter is higher and (2) the amount of capital per person is lower. 
E)  The population tends to be higher when (1) the productivity parameter is higher and (2) the amount of capital per person is higher.

Question 17

As an economist working at the International Monetary Fund, you are given the following data for Italy: observed per capita GDP, relative to the United States, is 0.69; predicted per capita GDP, given by   , is 0.98. What is total factor productivity?

Accepted Answer

A)  0.75 
B)  0.68 
C)  0.99 
D)  0.81 
E)  0.70 
A)  0.75 
B)  0.68 
C)  0.99 
D)  0.81 
E)  0.70

Question 18

Suppose the payments to capital and labor are (w*L*)/Y* = 2/3 and (r*K*)/Y* = 2/3, respectively. One implication of this result is:

Accepted Answer

A)    . 
B)    . 
C)    . 
D)    . 
E)    . 
A)    . 
B)    . 
C)    . 
D)    . 
E)    .

Question 19

Figure 4.3: The Production Function  
-Consider Figure 4.3. The shape of this production function suggests:

Accepted Answer

A)  a diminishing marginal product of capital. 
B)  a constant marginal product of capital. 
C)  a diminishing marginal product of labor. 
D)  an increasing marginal product of capital. 
E)  Not enough information is given. 
A)  a diminishing marginal product of capital. 
B)  a constant marginal product of capital. 
C)  a diminishing marginal product of labor. 
D)  an increasing marginal product of capital. 
E)  Not enough information is given.

Question 20

Consider two countries, A and B. If each country produces using identical production functions, but yA  $\gt$ yB and kA =kB, the total factor productivity of country A equals that of B.

Accepted Answer

A) True 
 B)False

Exam 4: A Model of Production

As a measure for total factor productivity, we can use the quantity of ________ in an economy.

In the Cobb-Douglas production function , if a = 1/4, then:

Institutions are one example of factors that influence total factor productivity.

If the marginal product of capital equals the rental rate of capital, firms should not buy any more capital.

Refer to the following figure when answering the following questions. Figure 4.1: Production Function -Consider Figure 4.1. The shape of this production function suggests:

Figure 4.3: The Production Function -The solution to the firm's profit maximization is:

The marginal product of labor is measured in:

Consider two economies. If each country has the same production function and the same amount of capital and labor, the country that ________ produces more.

In the year 2014 total factor productivity was about ________ times ________ important than capital per person when determining differences in per capita GDP using the production model.

In the Cobb-Douglas production function , what do a <\lt< 1 and b =1 - a reflect? Show how you derive your answer.

As a rough approximation, differences in capital per person explain about ________ of the difference in incomes between the richest and poorest countries, while differences in ________ explain ________.

In the United States, the average number of years of education adults over the age of 25 have obtained is 18 years.

Accounting profit is ________ and is equal to ________.

If you have data on per capita GDP and capital per worker, to find total factor productivity you can use the equation , if capital's share of GDP is one-third.

Which of the following is an example of technology?

The equation has what two important implications?

As an economist working at the International Monetary Fund, you are given the following data for Italy: observed per capita GDP, relative to the United States, is 0.69; predicted per capita GDP, given by , is 0.98. What is total factor productivity?

Suppose the payments to capital and labor are (w*L*)/Y* = 2/3 and (r*K*)/Y* = 2/3, respectively. One implication of this result is:

Figure 4.3: The Production Function -Consider Figure 4.3. The shape of this production function suggests:

Consider two countries, A and B. If each country produces using identical production functions, but yA >\gt> yB and kA =kB, the total factor productivity of country A equals that of B.

Introduction to Macroeconomics

Measuring the Macroeconomy

An Overview of Long-Run Economic Growth

The Solow Growth Model

Growth and Ideas

The Labor Market, Wages, and Unemployment

Inflation

An Introduction to the Short Run

The Great Recession: a First Look

The Is Curve

Monetary Policy and the Phillips Curve

Stabilization Policy and the Asad Framework

The Great Recession and the Short-Run Model

Dsge Models: the Frontier of Business Cycle Research

Consumption

Investment

The Government and the Macroeconomy

International Trade

Exchange Rates and International Finance

Parting Thoughts

Filters

In the year 2014 total factor productivity was about times important than capital per person when determining differences in per capita GDP using the production model.

In the Cobb-Douglas production function $In the Cobb-Douglas production function , what do a \lt 1 and b =1 - a reflect? Show how you derive your answer.$ , what do a $\lt$ 1 and b =1 - a reflect? Show how you derive your answer.

As a rough approximation, differences in capital per person explain about of the difference in incomes between the richest and poorest countries, while differences in explain .

Accounting profit is and is equal to .

Suppose the payments to capital and labor are (wL)/Y* = 2/3 and (rK)/Y* = 2/3, respectively. One implication of this result is:

Consider two countries, A and B. If each country produces using identical production functions, but y_A $\gt$ y_B and k_A =k_B, the total factor productivity of country A equals that of B.